📈📉How Market Cycles Work | Bull & Bear Market 🐿

١٦ أغسطس ٢٠٢١

All the financial markets are cyclical:
after a sharp and strong bullish trend always comes a severe bearish rally.
After panic & massive selloffs, the market tends to recover and awakens optimism closing a vicious circle.

Watching carefully how the price acts during these cycles, an observer can identify the recurring stages.

#1 Accumulation
The accumulation stage starts once the market finds its bottom.
Bearish pressure weakens and the market starts trading in sideways.
While the crowd remains cautious, smart money like banks and hedge funds start buying the asset considering that to be undervalued.
It leads to occasional moderate spikes of a price.

Being the best time to buy the market, the accumulation stage is the hardest to spot correctly. Global pessimism and disbelief make the investor scared to buy the asset.

#2 - 3 Public Participation & Excess Stage
The accumulation stage and the actions of smart money make the crowd buy the asset steadily. Pushing the market to new highs and generating sufficient profits, the crowd brings more and more liquidity into the market.
Bullish trend is universally confirmed.

The optimism steadily transforms into euphoria and the asset quickly becomes overvalued. Greed starts to dominate the crowd. Record highs are reached and no one doubts further growth.

#4 Distribution
At some moment the market stops growing. Even though everyone is very confident in a bullish continuation, the market naturally refuses to grow.
Moreover, the market starts to slow down and volatility drops steadily.
The market starts ranging and trade in sideways.
Smart money starts selling their positions steadily to a greedy crowd.

#5 Bearish Trend
With an absence of growth, more and more market participants start selling the asset. Optimism steadily vanishes and pessimism comes into play.
Contemplating negative figures, the crowd starts to panic, making the market fall sharply.
The outlook is dark and no one believes in recovery.

Then the market suddenly starts slowing down and the cycle repeats.

Watch how the price acts, learn the price action & master the market cycles to benefit from any of them.

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